FOCUS Report Hub International Investment Services Inc.

X-17A-5 [Paper] - FOCUS Report

Published: 2015-03-13 17:46:25
Submitted: 2015-03-02
Period Ending In: 2014-12-31
scanned.pdf Scanned paper document


                                                                                    UNITED           STATES                                                         OMB APPROVAL
                                                        SECURITIESANDEXCHANGECOMMISSION                                                                    OMB Number:                3235-0123          I

                                                                             Washington,              D.C.20549                                            Expires:             March 31, 2016

   PUBLIC                                                    ANNUAL AUDITED REPORT SEC Estimated    average burden
                                                                                          hoursperresponse......12.00

                                                                  FOR M X-17A-5 MagSectioD
                                                                                   processi09        SEC FILE NUMBER
                                                                     PART lil
                                                                                   R |} 20 3         8-  68237


                                                                                    FACING             PAGE                        Washippteg gg
                     Information    Required of Brokers and Dealers Pursuant to gion    17 of the
                              Securities Exchange Act of 1934 and Rule 17a-5 Thereunder

REPORT       FOR THE PERIOD                  BEGINNING                    01/01/2014                                         AND       ENDING              12/31/2014
                                                                                         MM/DD/YY                                                                  MM/DD/YY


                                                       A. REGISTRANT                           IDENTIFICATION


NAME OF BROKER-DEALER:                           Hub         International                     Investment                Services,               Inc                OFFICIAL USE ONLY

ADDRESS          OF PRINCIPAL                PLACE     OF BUSINESS:                  (Do not use P.O. Box No.)                                                          FIRM 1.D.NO.

  2393       Townsgate               Road,     Suite          101

                                                                                        (No.   and Street)

  Westlake            Village                                                                        California                                            91361

                            (City)                                                                   (State)                                               (Zip Code)

NAME AND TELEPHONE                          NUMBER           OF PERSON              TO CONTACT                 IN REGARD                TO THIS REPORT
    Denise Scher                                                                                                                                              (805)879-9576
                                                                                                                                                            (Area    Code   -   Telephone      Number)


                                                       B.ACCOUNTANT                            IDENTIFICATION

INDEPENDENT              PUBLIC         ACCOUNTANT                   whose opinion             is contained          in this Report*

     Crowe           Horwath          LLP

                                                                      (Name     -   if individual,      state last, first,   middle     name)

     1     Mid       America          Plaza,         Suite          700                 Oak          Brook                            Illinois                              60522-3697

         (Address)                                                             (City)                                                            (State)                           (ZipCode)


CHECK         ONE:

               E      Certified       Public Accountant

                 0    Public Accountant
                                                                                                                                                 15048536
                 C    Accountant        not resident         in United       States or any of its possessions.

                                                                          FOR OFFICIAL                    USE ONLY




 *Claims for exemption from the requirement                      that the annual report be covered by the opinion of an independent public accountant
must be supported          by a statement       offacts       and circumstances relied on as the basis for the exemption. See Section 240.17a-5(e)(2)



                                               Potential   persons who are to respond to the collection        of
                                               information   contained in this form are not required to respond
   SE C 1410 (06-02)                           unless the form displays a currently valid OMB control number.


                                                            OATH       OR AFFIRMATION

I,    Denise           Scher                                                                                   , swear    (or affirm)     that, to the best of
my knowledge         and belief the accompanying    financial          statement and supporting            schedules pertaining         to the firm of
                   Hub International         Investment                Services,     Inc                                                                   ,    as

of        December         31                                            , 20   14         , are true    and correct.     I further swear (or affirm)     that

neither      the company        nor any partner,   proprietor,   principal   officer     or director    has any proprietary      interest in any account
classified      solely as that of a customer,      except as follows:




           SEECALtFORNIA                                                                                      Signature


                 ATTACHED f5                                                                                     giri,


                       Notary   Public

This report       **
                contains (check all applicable boxes):
2 (a) Facing Page.
2 (b) Statement of Financial Condition.
0 (c) Statement of Income (Loss).
    (d) Statement of Changes in Financial Condition.
    (e) Statement of Changes in Stockholders'        Equity or Partners' or Sole Proprietors' Capital.
0 (f) Statement of Changes in Liabilities Subordinated to Claims of Creditors.
0 (g) Computation of Net Capital.
     (h) Computation for Determination      of Reserve Requirements      Pursuant to Rule 15c3-3.
     (i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3.
     (j) A Reconciliation,    including appropriate explanation ofthe Computation     of Net Capital Under Rule 15c3-1 and the
         Computation     for Determination   of the Reserve Requirements     Under Exhibit A of Rule 15c3-3.
     (k) A Reconciliation    between the audited and unaudited Statements of Financial Condition with respect to methods of
         consolidation.
      (1) An Oath or Affirmation.
 O    (m) A copy of the SIPC Supplemental     Report.
      (n) A report describing any material inadequacies                found to exist or found to have existed since the date ofthe previous                   audit.

 **For       conditions    of confidential   treatment    of certain   portions      of this filing,    see section 240.17a-5(e)(3).


A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate
is attached, and not the truthfulness, accuracy, or
validity of that document.

State of California
County of    Los      gler
Subscribed and sworn to (or affirmed) before me on this    e
day of GMwy           , 20E, by 'D-evti Se        &Mr
proved to me on the basis of satisfactory evidence to be the
person(s) who appeared before me.




(S                               nature


                   Hub International       Investment      Services    Inc.
            (A Wholly Owned Subsidiary of Hub International Limited)
                                   Table of Contents




                                                                                           Page


Report of Independent Registered Public Accounting          Firm........................      1

Financial    State me nts:
   Statement of Financial Condition..................................................         2


   Notes to the Statement of Financial     Condition...................................       3


À CroweHorwath.                                                             og."=t"'.---


               REPORT OF INDEPENDENT            REGISTERED       PUBLIC ACCOUNTING          FIRM




To the Board of Directors and Shareholder of
 Hub International Investment Services Inc.



We have audited the accompanying statement of financial condition of Hub International Investment
Services Inc. (the Company) as of December 31, 2014. This financial statement is the responsibility of the
Company's management. Our responsibility is to express an opinion on the financial statement based on
our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, the financial statement referred to above presents fairly, in all material respects, the financial
position of Hub International Investment Services Inc. as of December 31, 2014 in conformity with
accounting principles generally accepted in the United States of America.




                                                             Crowe Horwath LLP

Oak Brook, Illinois
February 26, 2015




                                                         1


                           Hub International           Investment        Services     Inc.
                  (A Wholly Owned Subsidiary of Hub International Limited)
                             Statement of Financial Condition


                                                                                                           As of

                                                                                                        December   31,
                                                                                                            2014
                                        ASSETS
CURRENT       ASSETS:
 Cash   .........................................................................................   $        3,594,702
 Accounts  receivable........................................................................                 369,928
 Intercompany receivable..................................................................                      51,522
 Prepaid expenses...........................................................................                    23,103
   Total current assets......................................................................                4,039,255
GOODWILL................................................................................                     1,937,513
OTHER INTANGIBLE     ASSETS, net..................................................                           2,725,076
PROPERTY        AND EQUIPMENT,               net.................................................                  3,109
  TOTAL       ASSETS.......................................................................         $        8,704,953


             LIABILITIES         AND     SHAREHOLDER'S               EQUITY
CURRENT       LIABILITIES:

 Accounts payable and accrued      liabilities...............................................       $          501,807
  Contingent earnout consideration payable.............................................                        229,782
   Total current liabilities..................................................................                 731,589
DEFERRED         INCOME TAX           LIABILITIES..........................................                    858,690
CONTINGENT        EARNOUT     CONSIDERATION                PAYABLE....................                         997,501
    TOTAL      LIABILITIES................................................................                   2,587,780


SHAREHOLDER'S             EQUITY:
  Common shares, no par value; 1,000 shares authorized;
     100 issued and   outstanding............................................................                        -


  Additional   paid-in capital.................................................................              6,703,643
  Accumulated     deficit........................................................................             (586,470)
    TOTAL SHAREHOLDER'S EQUITY............................................                                   6,117,173
       TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY.............. $                                            8,704,953




                The accompanying notes are an integral part of this financial statement.




                                                            2


                    .                     Hub International          Investment     Services   Inc.
                                  (A Wholly Owned Subsidiary of Hub International Limited)
                                        Notes to the Statement of Financial               Condition

Note 1: Nature of Operations


Hub International       Investment Services Inc., (the "Company", "we") is a financial services organization that offers
investment solutions for customers by conducting business as an introducing broker-dealer                 and investment advisor.        The
Company also refers employee benefit plan customers or producers to a third-party broker-dealer to hold customer
accounts and effect transactions in securities on behalf of such customers. The Company was incorporated in the state of
Delaware in 2007, and obtained a license to conduct operations on January                 8, 2010. The Company is a wholly owned
subsidiary of Hub International      Limited (the "Parent"), a global insurance brokerage company, and is a member of the
Financial Industry Regulatory Authority              Inc. ("FINRA") and the Securities Investor Protection Corporation ("SIPC").
The investment advisor is registered with various state department entities.

Under its membership agreement with FINRA and the Securities and Exchange Act of 1934 ("Act") Rule 15c3-3(k)(2)(i)
promulgated pursuant to the Act, the Company conducts business on a fully disclosed basis and does not execute or clear
securities transactions for customers. The Company has engaged with a third party broker-dealer that is responsible for
opening accounts and effecting transactions for such customers. Therefore, the Company is exempt from the requirement
of Rule 15c3-3 of the Act pertaining to the possession or control of customer assets and reserve requirements.

Note 2: Summary of Significant Accounting                Policies

A. Use of estimates
The accompanying          financial statements, and these notes, are prepared in accordance with accounting principles generally
accepted in the United States ("GAAP"). GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities            at the date of the financial
statement. Actual results could differ from those estimates.


B.   Property    and equipment, net
Property and equipment are stated at cost less accumulated depreciation.              Major improvements       enhancing the function
and/or useful life are capitalized.


C. Goodwill and Intangible assets,         net
Goodwill    represents the excess of cost over fair value of identifiable         net assets acquired through business acquisitions. In
accordance with ASC 350, Intangibles             -   Goodwill and Other, goodwill    is not amortized, but instead is reviewed for
impairment      on at least an annual basis by applying a fair-value-based        test.

In evaluating the recoverability      of the carrying value of goodwill we must make assumptions regarding the fair value of
the Company and determine if an indicator of goodwill               impairment exists by comparing the carrying value of the
Company with the estimated fair value. If we determine that an indicator of goodwill                  impairment exists, we must then
quantify the actual goodwill impairment charge, if any, by comparing the carrying value of goodwill to its estimated fair
value, based on the fair value of the Company's assets and liabilities as of the impairment test date. As of December 31,
 2014, goodwill was deemed to not be impaired.

 Intangible assets consist primarily of customer relationships and are amortized over their useful life which is based on the
 estimated timeframe over which the customer relationship is expected to contribute to the Company's future cashflows.



                                                                         3


                                           Hub International         Investment       Services      Inc.
                                  (A Wholly Owned Subsidiary of Hub International Limited)
                                          Notes to the Statement of Financial                Condition

In evaluating the carrying value of intangible assets, the Company must determine if an indicator of impairment                      exists by
comparing the carrying value of the asset with the estimated fair value. If the carrying value of the intangible asset is
greater than its fair value as of the impairment test date, the Company must record an impairment charge equal to the
calculated excess. As of December 31, 2014, intangible assets were deemed to not be impaired.


D.   Income taxes
The Company files both the federal and state tax return on a consolidated basis with its Parent. The Company accounts
for its income taxes using ASC 740, Income Taxes. ASC 740 requires the establishment of a deferred tax asset or liability
to recognize the future tax effects of transactions that have not been recognized for tax purposes, including taxable and
deductible temporary differences as well as net operating loss and tax credit carry forwards.


The Company reduces the carrying amount of deferred income tax assets, including the expected future benefit of
operating loss carry forwards by a valuation allowance if it is more likely than not that some portion of the deferred
income tax asset will not be realized. Interest or penalties related to income tax deficiencies are reported as a component
of income taxes. As of December 31, 2014 we performed our assessment of the realizability                       of deferred tax assets. Based
on the anticipated reversal pattern of our taxable temporary differences, we believe our deferred tax assets are "more
likely than not" to be realized. Therefore, no valuation allowance is required.


Note 3: Property and Equipment, Net


Property and equipment is stated at cost less accumulated depreciation.                The property and equipment summarized by
major classification     as of December 31, 2014 are as follows:

                                                                                       As of December 31, 2014
                                                                                              Accumulated      Net Book

            Computer equipment:                                               Cost              Depreciation             Value
                 Hardware.............................................
                                                                  $                  4,484     $        (1,375)      $       3,109
                 Software..............................................              2,500                 (2,500)             -


                  Total property and equipment, net............... $                 6,984      $   _      (3_,875) $        3,109


Note 4: Intangible Assets


Goodwill


The carrying amount of goodwill          as of December 31, 2014 is $1,937,513. We expect that approximately                $159,215 of our
total goodwill    balance will be deductible for income tax purposes in future periods.




                                                                          4


                                            Hub International Investment Services Inc.
                                      (A Wholly Owned Subsidiary of Hub International Limited)
                                          Notes to the Statement of Financial Condition

Other Intangible         Assets


The carrying amount of other intangible assets as of December 31, 2014 are as follows:

                                                                                         Gross Carrying        Accumulated            Net Carrying
                                                                                            Amount             Amortization             Amount

            Intangible assets subject to amortization:
                Customer  Relationships.............................................          2,509,882               (343,737)            2,166,145
                Trade   Names.......................................................             58,161                (18,177)               39,984
                 Total intangibleassets subject to       amortization.................. $     2,568,043       $       (361,914)      $     2,206,129

            Indefinite-lived    intangible assets:
                                                        .
                Trade Names...............................          ..... .... .... ................... . ....... . . . .........            518,947
                 Total indefinite-lived   intangible   assets...................... .. . . ...... ... ..       ....... .. ..........         518,947
                   Total other intangible assets,      net..................... .       ..... . ......        .... .................. $    2,725,076


In connection with certain of our acquisitions, we specifically                       identified     customer relationship and trade name intangible
assets subject to amortization. The amortizable intangible assets are amortized over the applicable estimated useful life.
The estimated useful life of the customer relationship and trade name intangible assets is 13.0 years and 4.0 years,
respectively.


We specifically identified our Hub International                    trade name as an indefinite-lived             trade name. As of December 31, 2014,
the indefinite-lived trade name is $518,947.


Note 5: Commitments             and Contingencies


In connection with the business acquisitions completed prior to 2014, the Company entered into agreements with the
sellers to pay consideration that is contingent on achieving certain financial performance measures in future periods. As
of December 31, 2014, the Company has $1,227,283 of contingent consideration, of which $229,782 is considered short
term, accrued on the Statement of Financial Condition.


The fair value of contingent consideration                   was determined based on the Company's                  best estimate of the present value of
the expected future earn-out payment. The fair value estimate of contingent consideration                                     payable is based on
observations of historical operating trends for the acquired businesses and current market and economic conditions that
the Company believes may impact earnout variables such as revenue and operating profits. When estimating contingent
earnout consideration, we historically                 do not utilize a range of possible estimates but instead determine a reasonable point
estimate of expected future payments.                   The Company's         best estimates of contingent earnout consideration liabilities           are
generally updated on, at minimum,                 a quarterly basis to reflect current market and operating conditions.




                                                                                     5


                                         Hub International        Investment      Services    Inc.
                              (A Wholly Owned Subsidiary of Hub International Limited)
                                      Notes to the Statement of Financial              Condition

Note 6: Income Taxes


The components of deferred tax assets and liabilities       as of December 31, 2014 are as follows:

                                                                                                               As of
                                                                                                           December     31,
                                                                                                               2014

                 Deferred   tax asset:
                  Future state tax  deduction...........................................................           12,101
                  Charitable  contribution carryover...................................................                367
                  Accrued bonus.......................................................................                 757
                   Net deferred tax     asset.............................................................$        13,225
                 Deferred   tax liability:
                  Book vs. tax basis difference for fixed  assets....................................                  (536)
                  Book vs. tax basis difference for intangible assets...............................             (865,210)
                  Prepaid insurance....................................................................            (6,169)
                   Net deferred tax liability...........................................................   $     (871,915)
                 Total deferred tax   liability.............................................................     (858,690)


In accordance with the relevant accounting guidance, the Company has determined that no reserve is required for
uncertain tax positions.


The company is subject to    U.S. federal income tax as well as various other state income tax. The Company is no longer
subject to examination by taxing authorities for the years before 2011, with the exception of the State of California,                  which
has a four year statute.


Note 7: Related Party Transactions


The Parent and the Parent's other wholly owned subsidiaries (the "Subsidiaries") administer day-to-day                    operations and
provide services to the Company such as human resource, information               technology, record-keeping       and clerical.   In
addition, the Parent and the Subsidiaries provide the Company's office space. In return, the Company pays the Parent and
the Subsidiaries for operating expenses incurred and paid on its behalf in accordance with an established service
 agreement.


 The Parent provides the Company capital funding as needed to satisfy its expenses with both the Subsidiaries and other
 vendors and to remain net capital compliant.


 Note 8: Net Capital Requirements


 The Company is subject to the Uniform Net Capital Rule 15c3-1 promulgated pursuant to the Act, which requires
 maintaining   a minimum    net capital, and requires that the ratio of aggregate indebtedness to net capital not to exceed 15 to
 1. Net capital and aggregate indebtedness changes day to day, but as of December 31, 2014, the net capital was $963,618,
 of which $848,345 was in excess of its required minimum net capital of $115,273. The ratio of aggregate indebtedness to
 net capital as of December 31, 2014 was 1.79.
                                                                      6


       CrOWeHOTWN.                                                       °°","°EE---


              REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING                      FIRM



To the Board of Directors and Sharehoider of
 Hub International Investment Services Inc.


We have reviewed management's statements, included in the accompanying Exemption Report Pursuant
to Rule 17a-5(d), in which (1) Hub international Investment Services Inc. (the Company) identified the
following provisions of 17 C.F.R. § 15c3-3(k) under which the Company claimed an exemption from 17
C.F.R.§ 240.15c3-3: (k)(2)(i) (the Exemption Provisions) and (2) the Company stated that the Company
met the identified Exemption Provisions throughout the period from June 1, 2014 to December 31, 2014
without exception. The Company's management is responsible for compliance with the Exemption
Provisions and its statements.

Our review was conducted in accordance with the standards of the Public Company Accounting Oversight
Board (United States) and, accordingly, included inquiries and other required procedures to obtain evidence
about the Company's compliance with the Exemption Provisions. A review is substantially less in scope
than an examination, the objective of which is the expression of an opinion on management's statements.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to management's
statements referred to above for them to be fairly stated, in all material respects, based on the conditions
set forth in paragraph (k)(2)(i) of Rule 15c3-3 under the Securities Exchange Act of 1934.




                                                          Crowe Horwath LLP

Oak Brook, Illinois
February 26, 2015




                                                     1


         InternaÛÛ|pna
          investment Sewices

                                                  Hub International   investment      Services, Inc.


2393 Townsgate Road, SuiteA01
Westlake Village, CA 93161
Main Office (805) 682-2571

Denise   R.Scher
President & Chief Compliance    Officer

Direct (805) 879-9576
Fax (805) 832-6447



                      Hub International Investment Service, Inc.'s Exemption Report

Hub International Investment Services, Inc. (the "Company") is a registered broker-dealer
subject to Rule 17a-5 promulgated by the Securities and Exchange Commission (17 C.F.R.
§240.17a-5,  "Reports to be made by certain brokers and dealers"). This Exemption Report was
prepared as required by 17 C.F.R.   §240.17a-5(d)(1) and (4). To the best of its knowledge and
belief, the Company states the following:

The Company may file an Exemption Report because the Company had no obligations under 17
C.F.R.§ 240.15c3-3. The Company met the identified exemption provisions under the claim
exemption Rule 15c3-3(k)(2)(i) of the Act throughout the period from June 1, 2014 to December
31,2014 without exception.



Hub International Investment Services


I, Denise Scher, swear (or affirm) that, to my best knowledge and belief, this Exemption Report
is true and correct.

 By:

 Title: President and Chief Compliance Officer

 February     26, 2014




                                          Member FINRA and SIPC



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